Ord 2199 - Loan Agmt Sp PW Fund
COUNCil Bill NO. 1823
ORDINANCE NO. 2199
A ORDINANCE AUTHORIZING A lOAN AGREEMENT FROM THE SPECIAL PUBLIC WORKS
FUND AND ENTERING INTO A SPECIAL PUBLIC WORKS FUND FINANCIAL ASSISTANCE
AWARD CONTRACT; AUTHORIZING THE MAYOR TO SIGN THE lOAN AGREEMENT AND
CONTRACT; AND DECLARING AN EMERGENCY.
WHEREAS, The City of Woodburn is a municipality within the meaning of Oregon
Revised Statutes (ORS) 285.700 (1), and
WHEREAS, ORS 285.700 through 285.750 (the Act) authorizes the City to file an
application with the Oregon Economic Development Department to obtain financial
assistance from the Special Public Works Fund, and
WHEREAS, The city filed an application with the Department to obtain financial
assistance to make Woodland Avenue infrastructure improvements required for the
Waremart, Inc distribution center which is an infrastructure project within the meaning of
the Act, and
WHEREAS, The Department has approved the city's application for financial
assistance from the Special Public Works Fund pursuant to the Act, and
WHEREAS, Notice relating to the city's consideration of the adoption of this
Ordinance was published at least once in a newspaper of general circulation within the City
of Woodburn. Such notice was published at least 14 days in advance of the adoption of
this Ordinance; NOW THEREFORE
THE CITY OF WOODBURN ORDAINS AS FOllOWS:
Section 1 loan Authorized. The Mayor is authorized to execute the Financial
Assistance Award Contract, the loan Agreement, and the Promissory Note which are
affixed, respectively, as Attachment" A", Attachment "B" and Exhibit UF" of Attachment
"A" and are by this reference incorporated herein and such other documents as may be
required to obtain financial assistance including a loan from the Department on the
condition that the principal amount of the loan from the Department to the Municipality is
not in excess of $450,000.00 and the interest rate on such loan is not in excess of six(6)
percent. The proceeds of the loan from the Department shall be applied solely to the
UCosts of the Project" as such term is defined in the loan Agreement.
Page 1 - COUNCIL BILL NO. 1823
ORDINANCE NO. 2199
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Section 2. Security. Amounts payable by the city shall be payable from the sources
described in Section 3.09 of the Loan Agreement and Oregon Revised Statutes 285.723
(2) which include:
a. any sources of funds that are legally available to the city,
b. the revenues, if any, of the Project, including special assessment revenues,
if any, and
c. the city's general fund including the general revenues of the city, other funds
which may be available for such purpose and a pledge of the city's taxing
power within the restrictions of Article XI, Section 11 and 11 b of the
Constitution of the State of Oregon. The obligation of the city to make
payments pursuant to the Loan Agreement is a full faith and credit obligation
of the city that is not subject to annual appropriation.
Section 3. Additional Documents. The Mayor is hereby authorized to enter into any
agreements and to execute any documents or certificates which may be required to obtain
financial assistance from the Department for the Project pursuant to the Financial
Assistance Award Contract and the Loan Agreement.
Section 4. Tax-ExemDt Status. The city covenants not to take any action
or omit to take any action if the taking or omission would cause interest paid by the city
pursuant to the Loan Agreement not to quality for the exclusion from gross income
provided by Section 1 03(a) of the Internal Revenue Code of 1986, as amended. The Mayor
of the city may enter into covenants on behalf of the city to project the tax-exempt status
of the interest paid by the city pursuant to the Loan Agreement and may execute any Tax
Certificate, Internal Revenue Service forms or other documents as shall be required by the
Department or their bond counsel to protect the tax-exempt status of such interest.
Section 5. Reimbursement Bonds. The city may reimburse expenditures for the
Project with amounts received from the Department pursuant to the Financing Documents.
Additionally, the city understands that the Department may fund or reimburse itself for the
funding of bonds issued by the State of Oregon pursuant to the Act. This Ordinance shall
constitute "official intent" within the meaning of Section 1.150-2 of the Income Tax
Regulations promulgated by the United States Department of the Treasury with respect to
the funding or the reimbursement for the funding of the costs of the Project with the
proceeds of the city's loan pursuant to the Financing Documents and with the proceeds of
any bonds issued by the State of Oregon pursuant to the Act.
Page 2 .
eouNelL BILL NO. 1823
RESOLUTION NO. 2199
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Section 6. This ordinance being necessary for the immediate preservation of the
public peace, health and safety, and emergency is declared to exist and this ordinance shall
take effect immediately upon passage by the Council and approval by the Mayor.
Approved as to form~)0YdfR-/)
eity Attorney
l ~ 2.1- -1 :r
Date
APPROVED:
,>/>>~ ~fi~7
Nancy A. K' ksey, Mayor
/
Passed by the Council
September 8, 1997
September 9, 1997
September 9, 1997
September 9, 1997
Submitted to the Mayor
Approved by the Mayor
Filed in the Office of the Recorder
ATTEST: ----.ron. ..----r-~
Ma'r7ifru\~, Recorder
City of Woodburn, Oregon
Page 3 -
COUNelL BILL NO. 1823
RESOLUTION NO. 2199
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RECIPIENT COpy
STATE OF OREGON
SPECIAL PUBLIC WORKS FUND
FINANCIAL ASSISTANCE AWARD CONTRACT
This Contract is made and entered into by and between the State of Oregon, acting by and through its
Economic Development Department ("State") and the City of Wood bum ("Borrower"). The reference
number of this Contract is B97002.
RECITALS
WHEREAS, the award of financial assistance which is the subject ofthis Contract is authorized by
ORS 285.700 through 285.753; and
WHEREAS, the State has reviewed the Borrower's application and detemiined the Project, as
hereinafter defined, is feasible and merits funding; and
WHEREAS, the State has found that economic development in the Project Area, as hereinafter
defined, is prevented or substantially restricted by a lack of infrastructure improvements and that a high
probability for industrial and/or commercial development exists in the Project Area; and
WHEREAS, the Borrower represents that $905,000 is a reasonable estimate of the Costs of the
Project, as hereinafter defined; and
WHEREAS, the Borrower has committed to provide $5,000 in public and/or private resources as
matching funds for the Project; and
WHEREAS, the State is willing to provide a Loan of $450,000 and a Grant of$450,000 to the
Borrower on the terms and conditions of this Contract.
THEREFORE, the parties agree as follows:
SECTION 1
CERTAIN DEFINITIONS
As used in this Contract, the following terms shall have the following meanings:
"&1" shall mean ORS 285.700 through 285.753, as the same may from time to time be amended and
supplemented.
"Award" shall mean written notification from the State offering a Loan and/or Grant to the Borrower.
"Contract" means a contract between the State and a Borrower including the Loan Agreement and
Note attached thereto, as it may be supplemented, modified or amended from time to time in accordance
with the terms thereof and of the Bond Indenture.
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"Costs of the Proiect" shall mean all costs of acquiring and constructing the Project, including any
financing costs properly allocable to the Project as set out in Exhibit B to the Loan Agreement, the
Approved Project Budget.
"Default" shall mean an Event of Default or an event which with notice or lapse of time or both
would become an Event of Default as set out in Section 7 hereof
".Gnln1" shall have the meaning ascribed thereto in Section 2(B) hereof
"Loan" shall have the meaning ascribed thereto in the Loan Agreement.
"Loan Agreement" shall mean the Loan Agreement, Exhibit 1 hereto, entered into between the State
and the Borrower on the date hereof
"Proiect" shall have the meaning ascribed thereto in the Loan Agreement and described in Exhibit A
of the Loan Agreement.
"Proiect Area" shall mean all properties that will be directly benefitted and served by construction of
the Project.
"Proiect Close Out Date" shall mean the date on which the State sends the Borrower written
confirmation that the Project has been properly constructed and that the job creation required by Section
5(e) hereof has occurred.
"Proiect Completion Date" shall mean the date on which the Borrower has completed construction of
the Project, as set out in Exhibit C(4) of the Loan Agreement.
"SPWF" shall mean the Special Public Works Fund created by ORS 285.733(1).
SECTION 2
FINANCIAL AWARD
A. Amount of Loan
Subject to the terms and conditions of this Contract and the Loan Agreement as amended, attached
hereto as Exhibit 1 and incorporated herein by reference, the State agrees to make a loan to Borrower in
the principal amount of $450,000 (the "Loan").
B. Amount of Grant
Subject to the terms and conditions ofthis Contract, the State agrees to provide funds to the
Borrower in the amount of $450,000 (the "Grant").
C. Availability of Funds
The amounts set out in Sections 2(A) and (B) above are subject to the availability of moneys in the
SPWF.
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D. Change in the Act
The State shall not be obligated to provide the Loan and/or Grant if, on or prior to the time the
Borrower satisfies all conditions for disbursement of the Loan and/or Grant, there has been a change in
the Act so that the Project is no longer eligible for the financial assistance authorized by this Contract.
E. Drawdowns
The State shall disburse the Loan and/or Grant after the Borrower submits drawdown requests on a
State-approved cash request form. The Borrower may not draw down any of the Grant until the entire
Loan, and any interest earned thereon, has been expended. The Grant may only be drawn down to pay
for the Costs of the Project that have been incurred.
SECTION 3
USE OF SPECIAL PUBLIC WORKS FuND A WARD .
A. Eligible Activities
The use of the Grant and/or Loan are expressly limited to the activities set out in the Project
description, Exhibit A of the Loan Agreement. The use of these funds is also expressly subject to the
Special Conditions set out in Exhibit 2 hereto, and by this reference incorporated herein.
B. Inelil1ible Activities
No part of the Loan or Grant shall be used for: administrative purposes, preliminary planning, legal,
fiscal or economic investigations, reports or studies to determine the economic and engineering feasibility
of the Project, the purchase of equipment not directly appurtenant to the Project, or construction or
repair of facilities owned and operated by private parties, the purchase of off-site property for uses not
directly related to the Project or costs incurred prior to the date of the Award, except as provided for in
ORS 285.740(4).
C. Unexpended Funds
Any portion of the Grant remaining after this Contract is terminated or 90 days after the Project
Completion Date shall be returned to the SPWF within 90 days of the Project Completion Date or
termination.
D. SPWF Participation Rate
The Borrower shall finance no more than ninety-nine and one half percent (99.5%) of the Costs of the
Project, as set out in Exhibit B to the Loan Agreement, from the Grant and Loan ("Participation Rate").
If the Costs of the Project are less than the amount set out in the Recitals, Borrower shall use less of the
Grant and Loan so as to maintain the Participation Rate.
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SECTION 4
REPRESENTATIONS OF THE STATE
The State certifies that at the time this Contract is signed, sufficient funds are available and authorized
for this Contract.
SECTION 5
REPRESENTATIONS OF THE BORROWER
The Borrower represents and warrants to the State that:
A. Matching Funds
Matching funds of$5,000 are available and committed to the Project. Before disbursement of the
Loan or Grant the Borrower shall demonstrate, to the satisfaction of the State, that it has obtained any
matching funds that are needed to pay for the Costs of the Project.
B. Binding Obligations
This Contract has been duly executed and delivered by the Borrower and will constitute the legal,
valid and binding obligation of the Borrower, enforceable in accordance with its terms.
C. Job Creation
The Project will create and/or retain 45 full-time jobs. The following firms have pledged to
(create/retain) jobs in connection with the Project.
Firm Number of Jobs to be Number of
Created/Retained Family-Wage Jobs
Waremart, Inc. 45 14
The minimum number of jobs that must
be created within two (2) years from the 45 14
date of this Contract to meet program
requirements are:
D. Drawings
Borrower shall obtain as-built drawings for all facilities constructed with the Loan and Grant.
Borrower shall obtain certification of completion per as-built drawings from the project engineer.
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SECTION 6
COVENANTS OF BORROWER
Until the Project is completed and the Loan repaid Borrower agrees that, unless the State shall
otherwise consent in writing:
A. Compliance with Laws
The Borrower will comply with the requirements of all applicable laws, rules, regulations and orders
of any governmental authority that relate to the construction of the Project and the operation of any
utility system of which the Project is a component. In particular, but without limitation, the Borrower
shall comply with:
I. State procurement regulations found in ORS Chapter 279.
2. State labor standards and wage rates found in ORS Chapter 279.
3. State municipal finance and audit regulations found in ORS Chapter 297.
4. State regulations regarding industrial accident protection found in ORS Chapter 656.
5. State conflict of interest requirements for public contracts.
6. State environmental laws enacted by agencies listed in Exhibit 3 hereto.
7. Oregon Administrative Rules, chapter 123, Division 42, as amended from time to time at the
discretion of the State.
8. State municipal bonding requirements found in ORS Chapters 280, 284, 286, 287 and 288.
B. Operation and Maintenance of the Proiect
The Borrower will have a program, documented to the satisfaction of the State, for the on-going
maintenance, operation and replacement, at its sole expense, of the public works service system, if any, of
which the Project is a part by the Project Completion Date. This program should include a plan for
generating revenues sufficient to assure the operation, maintenance and replacement of the facility during'
the service life of the Project.
C. Signs and Notifications
The Borrower shall display a sign, provided by the State, near the Project construction site stating
that the Project is being funded by Lottery proceeds for the purpose of creating jobs. The Borrower shall
include the following statement, prominently placed, on all plans, reports, bid documents and
advertisements relating to the Project:
'This Project was funded in part with a financial award from the Special Public Works Fund, funded
by the Oregon State Lottery and administered by the State of Oregon, Economic Development
Department. "
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D. Economic Benefit Reports
The Borrower shall submit reports on the economic development benefits of the Project for the
period from the date hereof until two (2) years after the Project Close Out Date at such intervals and in
such form as the State shall specify. Reports shall document temporary construction jobs associated with
the Project and any new direct permanent or retained jobs resulting from the Project. The reports shall
document the general economic benefits of the Project to the community and provide other information
necessary to evaluate the success of the Project. The preparation and filing of these reports shall be at the
Borrower's expense.
E. Insurance
Except as may be provided in the Special Conditions of Award, in the event the Project, or any
portion thereof, is destroyed and the project is insured, any insurance proceeds shall be paid to the State
and shall be applied to the principal of and interest on the Loan unless the State agrees in writing that the
insurance proceeds shall be used to rebuild the Project.
F. Creation of Accounts
In case of any loan that is not funded in whole or in part with the proceeds of State Bonds, the
borrower shall establish and maintain the following Construction Account: The Loan proceeds (as and
when the Loan proceeds are disbursed by the State to the Borrower), Grant and matching funds shall be
deposited in this account. Earnings on this account shall be credited to this account. Moneys in this
account shall be used to pay the Costs of the Project.
G. Sales Leases and Encumbrances
Borrower may not sell, exchange, or otherwise dispose of any property constituting a part of the
Project unless it is worn out, obsolete or, in the reasonable opinion of the Borrower, no longer useful in
the operation of the Project. Except as may be provided in the Special Conditions of Award, proceeds of
such sale, exchange or other disposition not used to replace the property in an amount equal to the
Participation Rate shall be deposited in the Loan Account.
H. Disbursement of Grant Drawdowns
The amount oftime between receipt of Grant funds by the Borrower and disbursement shall be kept
as brief as is administratively possible.
I. Condemnation Proceeds
Except as may be provided in the Special Conditions of Award, in the event the Project, or any
portion thereof is condemned, any condemnation proceeds shall be deposited in the Loan Account and
shall be used to repay the outstanding principal and interest on the Loan.
1. First Source Hiring Agreement
Prior to disbursement of the Loan or Grant, Waremart, Inc., shall enter into a First Source Hiring
Agreement with the Oregon Employment Department, and a copy of the fully executed First Source
Hiring Agreement must be forwarded to the State.
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SECTION 7
DEFAULT
If any of the following Events of Default occurs and is continuing, namely:
A. The Borrower fails to proceed expeditiously with, or to complete, the Project or any segment or
phase of the Project in accordance with the plans and schedules approved by the State; or
B. Any representation with respect to current or historical information made to the State herein or in any
other pertinent documents and reports relied upon by the State in gauging the progress on the Project and
performance of duties by the Borrower, are untrue in any material respect; or
C. The Borrower fails to perform or observe any of its covenants or agreements contained herein; or
D. If, within six (6) months from the date of this Contract, the Borrower has not entered into binding
legal agreements with all private parties necessary to complete the Project; or
E. The Borrower is in default under the Loan Agreement.
Thereupon, and in each such case, the State, by written notice of default to the Borrower, may
terminate the whole or any part of this Contract. Notice of default shall specify, with reasonable
particularity, the deficiencies in the Borrower's performance and shall provide the Borrower thirty (30)
days, or such longer period as the State may authorize in its sole discretion, to correct such deficiencies.
SECTION 8
REMEDIES
In the event the Borrower is found in Default under this Contract, the State may pursue any or all of
the remedies set forth in the Loan Agreement and any other remedies available at law or in equity. Such
remedies may include, but are not limited to, termination of the Contract or Loan Agreement, stop
payment on or return of the Loan and Grant, payment of interest earned on the Loan and Grant,
declaration of ineligibility for the receipt of future SPWF awards and withholding of other State funds
due the Borrower.
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SECTION 9
MISCELLANEOUS
A. No Implied Waiver Cumulative Remedies
No failure on the part of the State to exercise, and no delay in exercising, any right, power, or
privilege under this Contract shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Contract preclude any other or further exercise thereof or the
exercise of any other such right, power or privilege. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
B. Notices
All notices, requests, demands, and other communications to or upon the parties hereto shall be in
writing and shall be deemed to have been duly given or made when deposited in the mails, postage
prepaid, addressed to the party to which such notice, request, demand, or other communication is
requested or permitted to be given or made at the addresses set forth below or at such other address of
which such party shall have notified in writing the other party hereto.
If to the State:
Economic Development Department
775 Summer Street NE
Salem, Oregon 973 I 0
Attn.: Manager
Regional Development Division
If to the Borrower:
Mayor
City of Woodburn
270 Montgomery Street
Woodburn, OR 97071
C. Amendments
The terms of this Contract, including timeframes for Project completion, will not be waived, altered,
modified, supplemented, or amended in any manner except by written instrument signed by the parties.
D. Attorney Fees
The prevailing party in any dispute arising from this Contract shall be entitled to recover from the
other its reasonable attorney's fees at trial and on appeal.
E. Indemnity
To the extent permitted by Article XI, Section 10 of the Oregon Constitution, Borrower's charter,
relevant Oregon statutes and the Oregon Tort Claims Act, Borrower shall indemnify the State and its
officers, employees and agents against any liability for damage to life or property arising from the
Borrower's actions under this Contract or the Loan Agreement or the actions of Borrower's
subcontractors, agents or employees.
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F. Severability
If any term or condition of this Contract is declared by a court of competent jurisdiction to be illegal
or in conflict with any law, the validity of the remaining terms and conditions shall not be affected, and
the rights and obligations of the parties shall be construed and enforced as if the Contract did not contain
the particular term or condition held to be invalid.
G. Merger
This Contract constitutes the entire agreement between the parties. There are no understandings,
agreements or representations, oral or written, not specified herein regarding this Contract. Borrower, by
the signature below of its authorized representative, hereby acknowledges that it has read this Contract,
understands it, and agrees to be bound by its terms and conditions.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed as of the
dates set forth below their signatures.
STATE OF OREGON, acting by and through
its Economic Development Department
City of Woodburn
(Borrower)
By:
Yvonne L. Addington, Manager
Regional Development Division
By:
-1:?(J~ A .)GJ....
ignature)
Title:
Mayor
!
Date:
Date: 9/~7
/ .
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Exhibit I
Page I of 26
Loan Agreement
BETWEEN
STATE OF OREGON
acting by and through its
ECONOMIC DEVELOPMENT DEPARTMENT
AND
CITY OF WOODBURN
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Exhibit I
Page 2 of 26
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1. 0 1. Definitions
4
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower .......................................... 7
SECTION 2.02. Particular Covenants oftheBorrower .................................... IO
ARTICLE ill
LOAN TO BORROWER; AMOUNTS PAY ABLE; GENERAL AGREEMENTS
SECTION 3.01. The Loan; Loan Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I6
SECTION 3.02. Disbursement of Loan Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16
SECTION 3.03. Loan Payments and Other Amounts Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16
SECTION 3.04. Unconditional Obligations ............................................ 17
SECTION 3.05. Loan Agreement to Survive Bond Indenture and State Bonds. . . . . . . . . . . . . . . . .. 17
SECTION 3.06. Disclaimer of Warranties and Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.07. Loan Prepayments ................................................. 18
SECTION 3.08. Unexpended Loan Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I8
SECTION 3.09. Source of Payment of Borrower's Obligations ............................. I8
SECTION 3.10. Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I9
SECTION 3.1 1. Maintenance of Records by State ........... . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20
ARTICLE IV
ASSIGNMENT
SECTION 4.01. Assignment and Transfer by State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20
SECTION 4.02. Assignment by Borrower ............................................. 2I
SECTION 4.03. References to Trustee, Bond Indenture, State Bonds and Issuer. . . . . . . . . . . . . . .. 21
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Exhibit 1
Page 3 of 26
ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01. Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22
SECTION 5.02. Notice of Default .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 23
SECTION 5.03. Remedies on Default ................................................ 23
SECTION 5.04. Attorney's Fees and Other Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 23
SECTION 5.05. Application of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 23
SECTION 5.06. No Remedy Exclusive; Waiver; Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 24
SECTION 5.07. Retention of State's Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 24
SECTION 5.08. Default by the State ................................................. 24
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 25
SECTION 6.02. Binding Effect ..................................................... 25
SECTION 6.03. Severability ....................................................... 25
SECTION 6.04. Amendments, Supplements and Modifications ............................. 25
SECTION 6.05. Execution in Counterparts ............................................ 26
SECTION 6.06. Applicable Law .................................................... 26
SECTION 6.07. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 26
SECTION 6.08. Compliance with Bond Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ~6
SECTION 6.09. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 26
ExmBITS
Exhibit A Project Description
Exhibit B Project Budget
Exhibit C Description of the Loan
Exhibit D Repayment Schedule
Exhibit E Form of Requisition
Exhibit F Promissory Note
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Exhibit 1
Page 4 of 26
THIS LOAN AGREEMENT, made and entered into as of the Loan Closing Date (as such term is
defined herein), by and between the State of Oregon acting by and through its Economic Development
Department (the "State"), and the Borrower described in Exhibit C hereto:
WITNESSETH THAT:
WHEREAS, the State, in accordance with the Act, the Contract and the Bond Indenture (as such
terms are hereinafter defined), will provide funds in the Special Public Works Fund created by
ORS 285.733(1) (the "SPWF") or will issue its bonds for the purpose of making loans to municipalities,
including the Borrower, to finance a portion of the cost of infrastructure projects; and
WHEREAS the Borrower has made timely application to the State for a loan to finance all or a
portion of the cost of an infrastructure project and the State has approved the Borrower's application for
a loan in an amount not to exceed the amount of the loan commitment set forth in Exhibit C hereto to
finance a portion of the cost of such project; and
WHEREAS, the Borrower has agreed under this Loan Agreement to make payments sufficient to pay
when due the principal of, premium, if any, and interest on the loan from the State pursuant to the
repayment schedule set forth on Exhibit D hereto; and
WHEREAS, the Borrower's obligations under this Loan Agreement shall be assigned to First
Interstate Bank of Oregon, N.A., as Trustee under the Bond Indenture, to provide for the payment of and
security for bonds issued by the State of Oregon;
NOW THEREFORE, for and in consideration of the award of the loan by the State, the Borrower
agrees to perform its obligation under this Loan Agreement in accordance with the conditions, covenants
and procedures set forth herein and attached hereto as a part hereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The following terms as used in this Loan Agreement shall, unless the context clearly requires
otherwise, have the meanings assigned to them below.
"Act" means Sections 285.700 through 285.753 of the Oregon Revised Statutes, as the same may
from time to time be amended and supplemented.
"Authorized Officer" means, in the case of the Borrower, the person whose name is set forth in
Exhibit C hereto or such other person or persons authorized pursuant to a resolution or ordinance of the
governing body of the Borrower to act as an Authorized Officer of the Borrower to perform any act or
execute any document relating to the Loan, or this Loan Agreement whose name is furnished in writing
to the State.
"Bond Counsel" means a law firm having knowledge and expertise in the field of municipal law and
whose opinions are generally accepted by purchasers of municipal bonds.
F:\USER\CDSUP\TEMP\TEMP7504_wpd
..,........ -_._-_._-_._--_.~
T[
Exhibit 1
Page 5 of 26
"Bond Indenture" means the Indenture of Trust dated as of July I, 1993, between the State and the
Trustee pursuant to which the State bonds are issued, between the Issuer, the State and the Trustee and
all amendments and supplements thereto adopted in accordance with the provisions thereof
"Borrower" means the Municipality that is a party to this Loan Agreement and is described on Exhibit
C hereto, and its successors and assigns.
"Business Day" means any day other than (i) a Saturday, Sunday or legal holiday or a day on which
banking institutions, in Salem, Oregon or in the city in which the principal office of the Trustee is located,
are closed, or (ii) a day on which the New York Stock Exchange is closed.
"Code" means the "Internal Revenue Code of 1986," as the same may be amended or supplemented
from time to time, including any regulations promulgated thereunder and any administrative or judicial
interpretations thereof
"Completion Date" means the earlier of (a) the date on which all of the proceeds of the Loan,
including any investment earnings derived from the investment of such proceeds have been spent, or (b)
the second anniversary of the Loan Closing Date.
"Contract" means a contract, between the State and a Municipality including the Exhibits attached
thereto, as it may be supplemented, modified or amended from time to time in accordance with the terms
thereof and of the Bond Indenture.
"Costs of the Project" means those costs that are (a) reasonable, necessary and directly related to an
"infrastructure project" within the meaning ofORS 285.700(2), including any financing costs properly
allocable to the Project (b) preliminary costs such as engineering and architectural reports, studies,
surveys, soil tests, designs, plans, working drawings and specifications necessary for the construction of
the infrastructure project and (c) permitted by generally accepted accounting principles to be costs of
such Project. The term "Costs of the Project" does not include costs (i) for preliminary planning or legal,
fiscal and economic investigations, reports and studies to determine the economic and engineering
feasibility of the Project, (ii) relating to any infrastructure projects that primarily focus on relocating
business or economic activity from one part ofthe State of Oregon to another part of the State of Oregon
or (iii) in excess of 100 percent of the total cost of any infrastructure project.
"Counsel" means an attorney at law or firm of attorneys at law (who may be, without limitation, of
counsel to, or an employee of, the State, the Issuer, the Trustee or the Borrower) duly admitted to
practice law before the highest court of any state.
"Event of Default" means any occurrence or event specified in Section 5.01 hereof.
"Issuer" means the State of Oregon acting by and through the State Treasurer of the State of Oregon.
"Loan" means the loan made by the State to the Borrower to finance or refinance a portion of the
Costs of the Project pursuant to this Loan Agreement. The Loan may be funded by the State from the
proceeds of the State Bonds or from other amounts held in the SPWF. For all purposes of this Loan
Agreement, the amount of the Loan at any time shall be the principal amount of the loan set forth in
Exhibit C attached hereto and made part of this Loan Agreement, less any amount of such principal
amount as has been repaid by the Borrower under this Loan Agreement.
F:\USER\COSUP\TEMP\TEMP7504.wpd
'--.- ._..~~_.._._---~--_.~._----'-
Exhibit 1
Page 6 of 26
"Loan Agreement" means this Loan Agreement, including the Exhibits attached hereto, as it may be
supplemented, modified or amended from time to time in accordance with the terms hereof
"Loan Closing Date" means the Loan Closing Date described on Exhibit C attached hereto.
"Loan Prepayment" means amounts paid by the Borrower that are in excess of the amounts required
to be paid as a Loan Repayment.
"Loan Repayment" means the scheduled payments of principal and interest required to be made by
the Borrower pursuant to the provisions of Exhibit D attached hereto and made a part hereof
"Loan Term" means the term of this Loan Agreement provided in Section 3.01 of this Loan
Agreement and Exhibit D attached hereto and made a part hereof
"Municipality" means any entity described in ORS 285.700(1) that has entered into a Contract with
the State pursuant to which such entity will borrow money from the Special Public Works Fund.
"Note" means the promissory note of the Borrower attached hereto as Exhibit F.
"Project" means the "infrastructure project" (within the meaning ofORS 285.700(2)) of the
Borrower described in Exhibit A attached hereto and made a part hereof, all or a portion of the Costs of
the Project of which are financed or refinanced by the State through the making of the Loan under this
Loan Agreement.
"Special Public Works Fund" or "S.PWF" means the fund created by ORS 285.733.
"State" means the State of Oregon acting by and through its Economic Development Department.
"State Bonds" means the series of bonds, if any, authorized by the Bond Indenture, together with any
refunding bonds authenticated and delivered pursuant to the Bond Indenture, in each case to finance or
refinance the Project through the initial funding or refinancing of all or a portion of the Loan.
"System" means the utility system or systems, if any, of the Borrower which includes the Project or
components of the Project, as such system or systems may be modified or expanded from time to time.
References in this Loan Agreement to a Borrower's "System" shall be ignored to the extent that the
Project is not a component of a utility system or systems.
"Trustee" means the First Interstate Bank of Oregon, N.A., and its successor or successors and any
other corporation which may at any time be substituted in its place as Trustee pursuant to the Bond
Indenture.
"Underwriter" means the broker, dealer or municipal securities dealer acting as an underwriter in the
primary offering of the State Bonds.
Except where the context otherwise requires, words importing the singular number shall include the
plural number and vice versa, and words importing persons shall include firms, associations, corporations,
agencies and districts. Words importing one gender shall include the other gender.
F:\USER\cOSUP\TEMP\TEMP7504.wpd
'_...--~_."--._"-_._._--~-~...,......."----'-~--_.."
-
Exhibit 1
Page 7 of 26
DURING ANY PERIOD OF TIME IN WInCH TillS LOAN AGREEMENT HAS NOT BEEN ASSIGNED TO THE
TRUSTEE, ALL REFERENCES IN THIS LOAN AGREEMENT TO "TRUSTEE," "BOND INDENTURE," "STATE
BONDS," "UNDERWRITER" AND "ISSUER" AND THE PROVISIONS OF TillS LOAN AGREEMENT
PERTAINING THERETO SHALL BE VOID AND OF NO FORCE OR EFFECT EXCEPT FOR PURPOSES OF
DETERMlNING THE APPLICABLE REQUIREMENTS OF THE BOND INDENTURE OR DETERMlNING ANY
REQUIREMENTS OF TillS LOAN AGREEMENT THAT REFER TO PROVISIONS OF THE BOND INDENTURE.
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower.
The Borrower represents for the benefit of the State, and the holders of the State Bonds as follows:
(a) Organization and Authority
(i) The Borrower is a Municipality as defined in the Act.
(ii) The Borrower has full legal right and authority and all necessary licenses and permits required
as of the date hereof to own, operate and maintain the Project and its System, other than licenses and
permits relating to the Project which the Borrower expects to receive in the ordinary course of
business, to carry on its activities relating thereto, to execute and deliver this Loan Agreement, to
undertake and complete the Project, and to carry out and consummate all transactions contemplated
by this Loan Agreement.
(iii) The Project is a project which the Borrower may undertake pursuant to Oregon law and for
which the Borrower is authorized by law to borrow money.
(iv) The proceedings of the Borrower's governing members and voters, if necessary, approving
this Loan Agreement and authorizing their execution, issuance and delivery of this Loan Agreement
on behalf of the Borrower, and authorizing the Borrower to undertake and complete the Project have
been duly and lawfully adopted in accordance with the laws of Oregon and such proceedings were
duly approved and published, if necessary, in accordance with applicable Oregon law, at a meeting or
meetings which were duly called pursuant to necessary public notice and held in accordance with
applicable Oregon law, and at which quorums were present and acting throughout.
(v) This Loan Agreement has been duly authorized, executed and delivered by an Authorized
Officer of the Borrower; and, assuming that the State has all the requisite power and authority to
authorize, execute and deliver, and has duly authorized, executed and delivered, this Loan
Agreement; this Loan Agreement constitutes the legal, valid and binding obligation of the Borrower
in accordance with its terms, and the information contained in Exhibits A and B attached hereto and
made a part hereof and in Sections 2, 3, 4 and 9 of Exhibit C attached hereto and made a part hereof
is true and accurate in all respects.
(vi) The Contract and the Loan Agreement have been authorized by an ordinance of the Borrower
which was adopted with not less than 14 days prior notice. Such notice was published at least once in
a newspaper of general circulation within the Borrower's jurisdiction.
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_h" ........~_.__~.__."'_
Exhibit 1
Page 8 of 26
(b) Full Disclosure.
There is no fact that the Borrower has not disclosed to the State in writing on the Borrower's
application for the Loan or otherwise that materially adversely affects the properties, activities, prospects
or condition (financial or otherwise) of the Borrower, the Project or the Borrower's System, or the ability
of the Borrower to make all Loan Repayments and otherwise observe and perform its duties, covenants,
obligations and agreements under this Loan Agreement. Neither the Borrower's application for the Loan
or the Borrower's representations in this Loan Agreement contain any untrue statement of a material fact
or omits any statement or information which is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Pending Liti~ation.
There are no proceedings pending, or, to the knowledge of the Borrower threatened, against or
affecting the Borrower, in any court or before any governmental authority or arbitration board or tribunal
that, if adversely determined, would materially adversely affect the properties, activities, prospects or
condition (financial or otherwise) of the Borrower or its System, or the ability of the Borrower to make
all Loan Repayments and otherwise observe and perform its duties, covenants, obligations and
agreements under this Loan Agreement, that have not been disclosed in writing to the State in the
Borrower's application for the Loan or otherwise to the State.
(d) Compliance with Existing Laws and Agreements.
The authorization, execution and delivery of this Loan Agreement by the Borrower, the observation
and performance by the Borrower of its duties, covenants, obligations and agreements thereunder and the
consummation of the transactions provided for in this Loan Agreement, the compliance by the Borrower
with the provisions of this Loan Agreement and the undertaking and completion of the Project will not
result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Borrower pursuant to any existing ordinance or resolution, trust agreement, indenture, mortgage, deed of
trust, loan agreement or other instrument (other than any lien and charge of this Loan Agreement and any
ordinance or resolution, or indenture, which authorized outstanding debt obligations of the Borrower
which are at parity with, or superior to, the Loan as to lien on, and source and security for, payment
thereon from the source of payment of the Loan) to which the Borrower is a party or by which the
Borrower, its System or any of its property or assets may be bound, nor will such action result in any
violation of the provisions of the charter or other document pursuant to which the Borrower was
established or any laws, ordinances, resolutions, governmental rules, regulations or court orders to which
the Borrower, its System or its properties or operations is subject.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
...,......" ~'''- ---~"~~....._----~.._-'
Exhibit 1
Page 9 of 26
(e) No Defaults.
No event has occurred and no condition exists that, upon authorization, execution and delivery ofthis
Loan Agreement or receipt of the amount of the Loan, would constitute an Event of Default hereunder.
The Borrower is not in violation of, and has not received notice of any claimed violation of, any term of
any agreement or other instrument to which it is a party or by which it, its System or its property may be
bound, which violation would materially adversely affect the properties, activities, prospects or condition
(financial or otherwise) of the Borrower or its System or the ability ofthe Borrower to make all Loan
Repayments or otherwise observe and perform its duties, covenants, obligations and agreements under
this Loan Agreement.
(f) Governmental Consent.
The Borrower has obtained or will obtain all permits and approvals required to date by any
governmental body or officer for the making, observance and performance by the Borrower of its duties,
covenants, obligations and agreements under this Loan Agreement or for the undertaking or completion
of the Project and the financing or refinancing thereof; and the Borrower has complied or will comply
with all applicable provisions of law requiring any notification, declaration, filing or registration with any
governmental body or officer in connection with the making, observance and performance by the
Borrower of its duties, covenants, obligations and agreements under this Loan Agreement or with the
undertaking or completion of the Project and the financing or refinancing thereof No consent, approval
or authorization of, or filing, registration or qualification with, any governmental body or officer that has
not been obtained is required on the part of the Borrower as a condition to the authorization, execution
and delivery of this Loan Agreement.
(g) Compliance with Law.
The Borrower
(i) is in compliance with all laws, ordinances, governmental rules and regulations to which it is
subject, the failure to comply with which would materially adversely affect the ability ofthe Borrower
to conduct its activities or undertake or complete the Project or the condition (financial or otherwise)
of the Borrower or its System; and
(ii) has obtained or will obtain all licenses, permits, franchises or other governmental
authorizations presently necessary for the ownership of its property or for the conduct of its activities
which, if not obtained, would materially adversely affect the ability of the Borrower to conduct its
activities or undertake or complete the Project or the condition (financial or otherwise) of the
Borrower or its System.
(h) Use of Proceeds.
The Borrower will apply the proceeds of the Loan (a) to finance all or a portion of the Costs of the
Project; and (b) where applicable, to reimburse the Borrower for a portion of the Costs of the Project,
which portion was paid or incurred in anticipation of reimbursement by the State. None of the proceeds
of the Loan shall be used for administrative purposes by the Borrower.
F:\USER\CD5UP\TEMP\TEMP7504.wpd
'........... .__ .____...._... "'__""_H+_'~__"""""__"~"' __._._._.... -' ,-.~......_~.-.._._-
Exhibit 1
Page 10 of 26
(i) The Proiect.
(i) The Project is feasible and there will be adequate funds available to repay the Loan.
(ii) The Project is situated in an area in which economic development is prevented or substantially
restricted by a lack of adequate sewage treatment works, solid waste disposal sites, water supply
works, roads, public transportation or other facilities that comprise the physical foundation for
industrial and commercial activity.
(iii) The Project is situated in a city or county with a comprehensive land use plan that allows
industrial and commercial development of a type and scale that is sufficient to produce revenues to
repay the costs of the Project.
(iv) A high probability exists for industrial or commercial development, or both, of the properties
served by the Project.
(v) To the extent shown in the Special Conditions of Award, the Borrower has provided as part
of the security for repayment of the Loan, provisions for payments from any owners of property
specially benefitted by the Project which are sufficient when considered with other security to assure
repayment of the Loan and the portion of any State Bonds that fund or refinance the Loan.
(vi) The Borrower has been provided with a copy of the rules adopted by the State under ORS
285.707 and the Project is in compliance with such rules.
(vii) The principal amount of the Loan shown on Exhibit C(5) attached hereto is not in excess of
the reasonable Costs of the Project.
SECTION 2.02. Particular Covenants of the Borrower.
(a) Source of Repayment.
The Loan shall be paid from the sources of repayment described in Section 3.09 of this Loan
Agreement. Such sources shall be applied to the punctual payment of the principal of and the interest on
the Loan, and all other amounts due under this Loan Agreement according to their respective terms.
(b) Performance Under Loan Agreement.
The Borrower covenants and agrees (i) to maintain the Project and its System in good repair and
operating condition; (ii) to cooperate with the State in the observance and performance of the respective
duties, covenants, obligations and agreements of the Borrower and the State under this Loan Agreement;
and (iii) to comply with the covenants described in the Exhibits to this Loan Agreement.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
'_.,,_..~."
~T
Exhibit I
Page 11 of 26
(c) Completion ofProiect and Provision of Moneys Therefor.
The Borrower covenants and agrees to provide the State with copies of all plans and specifications
relating to the Project for review and approval by the State. The Borrower further covenants and agrees
(i) to exercise its best efforts in accordance with prudent practice to complete the Project and to so
accomplish such completion on or before the estimated Project completion date set forth in Exhibit C(4)
hereto and made a part hereof; (ii) to proceed expeditiously with, and complete, the Project in accordance
with plans reviewed and approved by the State and (iii) to provide from its own fiscal resources all
moneys, in excess of the total amount of proceeds it receives pursuant to the Contract and the Loan,
required to complete the Project. For purposes of(ii) of the preceding sentence, if the State does not
review the plans and specifications or suggests modifications thereto within 30 days of the receipt of the
plans and specifications, they shall be deemed approved.
(d) Disposition of Proiect or System.
The Borrower shall not sell, lease, abandon or otherwise dispose of all or substantially all or any
substantial portion of the Project or its System or any other system which provides revenues to provide
for the payment of this Loan Agreement except on ninety (90) days' prior written notice to the State and,
in any event, shall not so sell, lease, abandon or otherwise dispose of the same unless the State consents
to such sale, lease, abandonment or other disposition and either:
(i) The Borrower assigns this Loan Agreement and the conditions of Section 4.02 hereof are
satisfied,
(ii) The Borrower demonstrates to the satisfaction of the Trustee that such sale, lease,
abandonment or other disposition will not adversely affect the rating of the State Bonds,
(iii) A rating of the Loan is obtained which (a) addresses such sale, lease, abandonment or other
disposition, (b) is no lower than the rating of the State Bonds and (c) shall be in one of the three
highest rating categories (without regard to any refinement or gradation of rating category by
numerical modifier or otherwise) by Moody's Investors Service or Fitch Investors Service, Inc., or
(iv) The State certifies to the Borrower that this Loan Agreement has not been assigned to the
Trustee and provides a copy of such certification to the Trustee.
The State shall not consent to any such sale, lease, abandonment or other disposition unless the State
shall have received an opinion of the State's counsel to the effect that such sale, lease, abandonment or
other disposition will not adversely affect the exclusion of interest on the Loan and on the State Bonds
from gross income for purposes offedera\ income taxation under Section 103(a) of the Code.
( e) Exclusion ofInterest from Federal C'rross Income and Compliance with Code.
(i) The Borrower covenants and agrees that it shall not take any action or omit to take any action
which action or omission would result in the loss of the exclusion of the interest on the loan from
gross income for purposes offederal income taxation as that status is governed by Section I03(a) of
the Code.
F:\U5ER\CDSUP\TEMP\TEMP7504.wpd
Exhibit 1
Page 12 of 26
(ii) The Borrower shall not take any action or omit to take any action, which action or omission
would cause the Loan to be "private activity bonds" within the meaning of Section 141(a) of the
Code. Accordingly, unless the Borrower receives the prior written approval of the State, the
Borrower shall neither (A) permit in excess of 10 percent of either (i) the proceeds (such term as used
in this Loan Agreement shall have the same meaning as when used in Section 141 of the Code) of the
Loan or (ii) the Project financed (or refinanced) with the proceeds of the Loan, to be used (directly or
indirectly) in any manner that would constitute "private business use" within the meaning of Section
141(b)(6) of the Code, nor (B) use (directly or indirectly) any of the proceeds of the Loan, to make or
finance loans to persons other than governmental units (as such term is used in Section 141 (c) of the
Code); provided further, that at least one half of the private business use permitted by clause (A) shall
be neither (i) disproportionate related business use, nor (ii) private business use not related to the
government use of such proceeds of the Loan.
(iii) The Borrower shall not directly or indirectly use or permit the use of any of the "gross'
proceeds" (within the meaning of Section 148 of the Code) of the Loan or any other funds or take
any action or omit to take any action, which use or action or omission would cause the Loan to be
"arbitrage bonds" within the meaning of Section 148(a) of the Code.
(iv) The Borrower shall not use (directly or indirectly) the proceeds of the Loan in any manner
that would constitute an "advance refunding" within the meaning of Section 149( d)( 5) of the Code
and shall not refund the Loan or any part ofthe Loan without prior written approval of the State.
(v) The Borrower will not cause the Loan to be treated as a "federally guaranteed" obligation for
purposes of Section 149(b) of the Code, as may be modified in any applicable rules, rulings, policies,
procedures, regulations or other official statements promulgated or proposed by the Department of
the Treasury or the Internal Revenue Service with respect to "federally guaranteed" obligations
described in Section I 49(b) of the Code. For purposes of this paragraph, the Loan shall be treated as
"federally guaranteed" if: (a) all or any portion of the principal or interest is or will be guaranteed
directly or indirectly by the United States of America or any agency or instrumentality thereof, or (b)
five percent or more of the proceeds ofthe Loan will be (I) used in making loans the payment of
principal or interest with respect to which is guaranteed in whole or in part by the United States of
America or any agency or instrumentality thereof, or (2) invested directly or indirectly in federally
insured deposits or accounts, and (c) none of the exceptions described in Section I49(b)(3) of the
Code apply.
(vi) The Borrower agrees to assist the State, the Issuer and the Trustee to ensure that all amounts
required to be rebated to the United States of America pursuant to Section I48(f) of the Code are
rebated to the United States of America. The Borrower agrees to provide all amounts necessary to
satisfY the requirements of Section 148(f) applicable to the Loan and, to pay to the State, the Issuer,
or the Trustee such amounts as may be directed by the State, the Issuer, or the Trustee and at such
times as the Borrower may be so directed to satisfY the requirements of Section 148(f) of the Code
applicable to the portion of the proceeds of any State Bonds, including any proceeds or other
amounts held in a reserve fund, applied to fund or refinance the Loan. The Borrower further agrees
to reimburse the State, the Issuer or the Trustee for the portion of any expenses incurred by them that
relate to the Loan and are necessary to satisfY the requirements of Section 148(f) of the Code.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
,._ ___""~,_,__,~"__,,,,,_,__,~~'_'______n_
Exhibit 1
Page 13 of 26
(vii) In furtherance of the foregoing, the Borrower covenants that it will comply with the
provisions of any tax certificate as to compliance with the provisions of Sections 103 and 141 through
150 of the Code entered into by the Borrower, the State or the Issuer with respect to the Loan and
will furnish to the State, the Issuer, or the Trustee in writing, upon reasonable request, information
regarding investments and use of proceeds of the Loan or the State Bonds and of any facilities
financed or refinanced therewith.
(viii) The Borrower shall not enter into any management agreement for the operation of the Project
that would cause the Loan to be or become a "private activity bond" within the meaning of Section
14I(a) of the Code.
(ix) Notwithstanding anything to the contrary, so long as is necessary to maintain the exclusion
from gross income for purposes of federal income taxation of interest on the Loan, the covenants
contained in this subsection (e) shall survive the payment of the Loan and the State Bonds, and the
interest thereon, including any payment pursuant to Section 3.07 ofthis Loan Agreement. The
Borrower acknowledges that the Loan may be funded in whole or in part with the proceeds of the
State Bonds and that failure to comply with the requirements of this subsection (e) could adversely
affect any exclusion of the interest on the State Bonds from gross income for federal income tax
purposes.
(x) Neither the Borrower nor any related party to the Borrower shall purchase State Bonds in an
amount related to the amount of the Loan.
(f) Operation and Maintenance of System.
The Borrower covenants and agrees that it shall, in accordance with prudent utility practice, (i) at all
times operate the properties of its System and any business in connection therewith in an efficient manner,
(ii) maintain its System in good repair, working order and operating condition, (iii) from time to time
make all necessary and proper repairs, renewals, replacements, additions, betterments and improvements
with respect to its System so that at all times the business carried on in connection therewith shall be
properly and advantageously conducted and (iv) not provide free service to any customer served by the
System except in an emergency; provided, however, this covenant shall not be construed as requiring the
Borrower to expend any funds which are derived from sources other than the operation of its System or .
other receipts of such System which are not sources of repayment under subsection (a) of this Section
2.02, and provided further that nothing herein shall be construed as preventing the Borrower from doing
so.
F:\USER\COSUP\TEMP\TEMP7504.wpd
,........
Exhibit 1
Page I4 of 26
(g) Records' Accounts.
The Borrower shall keep accurate records and accounts for the revenues and funds that are the source
of repayment of the Loan (the "Repayment Revenues"), separate and distinct from its other records and
accounts (the "General Records"). Such Repayment Revenues shall be maintained in accordance with
generally accepted government accounting standards and shall be audited annually by an independent
accountant, which audit may be part of the annual audit of the General Records of the Borrower. Such
Repayment Revenues and General Records shall be made available for inspection by the State or the
Trustee at any reasonable time, and a copy of such annual audit( s) therefor, including all written
comments and recommendations of such accountant, shall be furnished to the State within 210 days of
the close of the fiscal year being so audited.
(h) Inspections' Information.
The Borrower shall permit the State, and the Trustee and any party designated by any of such parties
to examine, visit and inspect, at any and all reasonable time, the property, if any, constituting the Project,
and to inspect and make copies of any accounts, books and records, including, without limitation, its
records regarding receipts, disbursements, contracts, investments and any other matters relating thereto
and to its financial standing, and shall supply such reports and information as the State and the Trustee
may reasonably require in connection therewith. In addition, the Borrower shall provide the State with
copies ofloan documents or other financing documents and any official statements or other forms of
offering prospectus relating to any other bonds, notes or other indebtedness of the Borrower that are
issued after the Loan Closing Date and are secured from the same source or sources of repayment as the
Loan.
(i) Insurance.
The Borrower shall maintain or cause to be maintained insurance policies with responsible insurers or
self insurance programs providing against risk of direct physical loss, damage or destruction of its
System, at least to the extent that similar insurance is usually carried by governmental units constructing,
operating and maintaining system facilities of the nature of the Borrower's System, including liability
coverage, all to the extent available at reasonable cost. Nothing herein shall be deemed to preclude the
Borrower from exerting against any party, other than the State, a defense which may be available to the
Borrower, including, without limitation a defense of immunity.
G) Costs of the Proiect.
The Borrower certifies that (1) the Costs of the Project, as listed in Exhibits Band C(3) hereto and
made a part hereof, is a reasonable and accurate estimation and based upon an engineer's feasibility
report and engineer's estimate stamped by a registered professional engineer and (2) the Costs of the
Project are not less than the sum of the proceeds of the Loan and the investment earnings projected to be
derived from the investment of such proceeds.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
"'T""
Exhibit I
Page 15 of 26
(k) Notice of Material Adverse Change.
The Borrower shall promptly notifY the State and the Trustee of any material adverse change in the
activities, prospects or condition (financial or otherwise) of the Borrower, the Project or its System, or in
the ability of the Borrower to make all Loan Repayments and otherwise observe and perform its duties,
covenants, obligations and agreements under this Loan Agreement.
(I) Continuing Disclosure Requirements.
The Borrower shall provide the State with any information needed to comply with paragraph (b)( 5) of
the Securities and Exchange Commission Rule 15c2-12 (17 c.F.R. ~ 240. I5c2-12), (the "Rule") with
respect to Oregon Bond Bank Revenue Bonds issued by the State Treasurer to fund any portion of the
Borrower's Loan. In addition, if the Borrower becomes an "obligated person" within the meaning of the
Rule or an "Obligated Borrower," as such term is defined by the State or the State Treasurer of the State
of Oregon, the Borrower shall, in addition to the requirements of paragraph (g) and (h) of Section 2.02 of
this Loan Agreement, provide the following to the State upon request:
(i) any and all financial information or operating data that may reasonably be requested by the
State to comply with the Rule and
(ii) audited financial statements, when and if prepared and available, prepared in accordance with
generally accepted accounting principles as established by the Government Accounting
Standards Board as in effect from time to time; provided, however, that if audited financial
statements are not available, unaudited financial statements will be provided with audited
financial statements to follow when and if available.
(m) Contract Covenants.
The Borrower covenants and agrees to comply with the terms of the Contract including the covenants
of the Borrower in Section 6 of the Contract.
(n) Continuing Representations.
The representations of the Borrower contained herein shall be true at the time of the execution of this
Loan Agreement and at all times during the term of this Loan Agreement.
F:\USER\COSUP\TEMP\TEMP7504.wpd
,..~ ._._.~-----,.._-"..--
Exhibit I
Page 16 of 26
ARTICLE m
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. The Loan; Loan Term.
(a) The State hereby agrees to loan and disburse to the Borrower in accordance with Section 3.02
hereof, and the Borrower agrees to borrow and accept from the State, the Loan in the principal amount
equal to the loan commitment set forth in Exhibit C(5) attached hereto and made a part hereof; provided,
however, that (i) the State shall be under no obligation to make the Loan if the Borrower does not deliver
the documents required by Section 6.3(a), (c) and (d) of the Bond Indenture (regardless of whether the
Loan Agreement is assigned to the Trustee) to the State on or prior to the Loan Closing Date or an Event
of Default has occurred and is continuing under the Bond Indenture or this Loan Agreement, and (ii) the
obligation of the State to fund the Loan is contingent upon the availability of moneys in the Special Public
Works Fund for use in the Project. The Borrower shall use the proceeds of the Loan strictly in
accordance with Section 2.01(h) hereof
(b) The term of the Loan is set forth on Exhibit D attached hereto. The Borrower hereby represents
that the term of the Loan is not in excess of the usable life of the Project.
SECTION 3.02. Disbursement of Loan Proceeds.
The State shall disburse amounts which in the aggregate are not in excess of the sum of (a) principal
amount of the Loan shown on Exhibit C( 5) to this Loan Agreement together with (b) all earnings derived
by the State from the investment of the proceeds of the Loan held in the Special Public Works Fund, to
the Borrower upon receipt by the State of a requisition executed by the Borrower in substantially the
form attached hereto as Exhibit E.
SECTION 3.03. Loan Payments and Other Amounts Payable.
The Borrower hereby covenants and agrees to repay the Loan in accordance with the terms of the
Note. In the event that the Borrower receives written notification from the State, the Issuer or the
Trustee that payments made pursuant to this Loan Agreement have been assigned by the State to the
Trustee under the Bond Indenture, all payments hereunder or pursuant to the Note shall be made directly
to the Trustee for the account of the State pursuant to such assignment. The Borrower acknowledges
that payment or defeasance of the State Bonds by the Issuer or the State does not constitute payment of
the amounts due under this Loan Agreement.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
'.,..-'-
Exhibit 1
Page 17 of 26
SECTION 3.04. Unconditional Obligations.
The obligation of the Borrower to make the Loan Repayments and all other payments required
hereunder and the obligation to perform and observe the other duties, covenants, obligations and
agreements on its part contained herein is payable solely from the sources of repayment described in
Section 3.09 hereto and shall be absolute and unconditional and shall not be abated, rebated, set-off,
reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in any manner or
to any extent whatsoever, while any payments under this Loan Agreement remain unpaid, regardless of
any contingency, act of God, event or cause whatsoever, including (without limitation) any acts or
circumstances that may constitute failure of considerations, eviction or constructive eviction, the taking
by eminent domain or destruction of or damage to the Project or the System, commercial frustration of
the purpose, any change in the laws of the United States of America or of the State of Oregon or any
political subdivision of either or in the rules or regulations of any governmentai authority, any failure of
the Issuer, the State or the Trustee to perform and observe any agreement, whether express or implied, or
any duty, liability, or obligation arising out of or connected with the Project, this Loan Agreement or the
Bond Indenture or any rights of set off, recoupment, abatement or counterclaim that the Borrower might
otherwise have against the Issuer, the State, the Trustee or any other party or parties; provided, however,
that payments hereunder shall not constitute a waiver ofany such rights. The Borrower shall not be
obligated to make any payments required to be made by any other Municipality under any separate loan
agreement or the Bond Indenture.
SECTION 3.05. Loan Agreement to Survive Bond Indenture and State Bonds.
The Borrower acknowledges that its duties, covenants, obligations and agreements hereunder shall
survive the discharge of the Bond Indenture applicable to the State Bonds and payment of the principal
of, redemption premium, if any, and interest on the State Bonds.
SECTION 3.06. Disclaimer of Warranties and Indemnification.
The Borrower acknowledges and agrees that (i) neither the Issuer, the State nor the Trustee makes
any warranty or representation, either express or implied as to the value, design, condition,
merchantability or fitness for particular purpose or fitness for any use of the System or the Project or any
portions thereof or any other warranty or representation with respect thereto; (ii) in no event shall the
Issuer, the State or the Trustee or their respective agents be liable or responsible for any direct,
incidental, indirect, special or consequential damages in connection with or arising out of this Loan
Agreement or the Project or the existence, furnishing, functioning or use of the System or the Project or
any item or products or services provided for this Loan Agreement; and (iii) to the extent authorized by
law, the Borrower shall indemnity, save and hold harmless the Issuer and the State against any and all
claims, damages, liability and court awards including costs, expenses, and attorney fees incurred as a
result of any act or omission by the Borrower, or its employees, agents or subcontractors pursuant to the
terms of this Loan Agreement, provided, however, that the provisions of this clause (iii) are not intended
to and shall not be construed as a waiver of any defense or limitation on damages provided for under and
pursuant to Chapter 30 of the Oregon Revised Statutes or under the laws of the United States or other
laws of the State of Oregon.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
Exhibit 1
Page 18 of 26
SECTION 3.07. Loan Prepayments.
The Borrower may make Loan Prepayments upon prior written notice not less than ninety (90) days
to the State and the Trustee and upon payment by the Borrower to the Trustee of the principal amount of
the Loan Prepayments to be prepaid, plus the interest to accrue on such amount to the date of payment;
provided, however, that
(a) no Loan Prepayment shall be made prior to the Optional Loan Prepayment date shown on Exhibit
C(7) to this Loan Agreement or, iflater, the date on which the State Bonds are first subject to optional
redemption,
(b) each Loan Prepayment shall include the prepayment premium, if any, applicable to such Loan
Prepayment as determined in accordance with Exhibit C(8) to this Loan Agreeinent or such greater
amount required to prepay the State Bonds (including the payment of any expenses of the Trustee
associated with such prepayment), and
(c) any Loan Prepayment may only be made upon the prior written approval of the State. Loan
Prepayments shall be applied first to any expenses of the Trustee and accrued interest on the portion of
the Loan to be prepaid and then to principal payments (including premium, if any) on the Loan in inverse
order of their maturity.
SECTION 308. Unexpended Loan Proceeds.
Any proceeds ofthe Loan held by the State on the second anniversary of the Loan Closing Date shall
be applied, on the next January 1 that is not less than forty five (45) days after such second anniversary
date, or any earlier date specified in the Bond Indenture or the State Bonds, to prepay principal on the
Loan in an amount equal to the amount of such unexpended proceeds less any amounts necessary to pay
any arbitrage rebate due with respect to the Loan pursuant to Section 148(f) of the Code. Principal
payments due on the Loan, as shown on Exhibit D attached hereto, shall be reduced in inverse order of
their maturity to the extent of any principal prepaid on the Loan pursuant to this Section 3.08. To the
extent that all principal due on the Loan is paid as a result of a prepayment of the Loan pursuant to this
Section 3.08, any remaining proceeds of the Loan held by the State in the account established for the
Borrower in the Special Public Works Fund shall be applied to pay any interest due on the Loan on the
Loan prepayment date described in this Section 3.08. If any amounts remain in the account established
for the Borrower in the Special Public Works Fund after the payment of amounts described in the
preceding sentence, such amounts shall be the property ofthe State and the Borrower shall have no claim
to such amounts.
SECTION 3.09. Source of Payment of Borrower's Obligations.
(a) The State and the Borrower agree that the amounts payable by the Borrower under this Loan
Agreement, including, without limitation, the amounts payable by the Borrower pursuant to Section 3.03,
Section 3.06, Section 3.07 and Section 5.04 of this Loan Agreement are payable from the source of
repayment described in paragraphs (b) and (c) of this Section 3.09. Nothing herein shall be deemed to
prevent the Borrower from paying the amounts payable under this Loan Agreement from any other
legally available source.
F:\U5ER\CDSUP\TEMP\TEMP7504.wpd
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Exhibit 1
Page 19 of 26
(b) The amounts payable by the Borrower under this Loan Agreement are payable from:
(i) any sources of funds that are legally available to the Borrower,
(ii) the revenues and funds shown as sources of repayment of the Loan on the Special Conditions
of Award attached to the Contract, and
(iii) the Borrower's general fund including the general revenues of the Borrower, other funds
which may be available for such purpose and the Borrower's taxing power within the restrictions of
Article XI, Section 11 and 11 b of the Constitution of the State of Oregon. If the Borrower is not a
county, the obligation of the Borrower to make payments hereunder is a full faith and credit
obligation of the Borrower and is not subject to annual appropriation. If the Borrower is a county,
the Borrower acknowledges its current intention to make all payments due' hereunder on the dates on
which such payments are due and, to the extent that funds are appropriated to make payments
hereunder, the obligation of the Borrower to make payments hereunder is a full faith and credit of the
Borrower.
(c) The Borrower expressly acknowledges that if the Borrower defaults on payments due under this
Loan Agreement, the State of Oregon, pursuant to ORS 285.727, may withhold any amounts otherwise
due to the Borrower to apply to payments due under this Loan Agreement. The State hereby covenants
to enforce any remedy available to the State pursuant to ORS 285.727.
SECTION 3.10. Delivery of Documents.
Concurrently with the execution and delivery of this Loan Agreement, the Borrower will cause to t
delivered to the State each of the following items:
a. an opinion of the Borrower's counsel substantially in the form set forth in Section 6.3 (a) of the
Bond Indenture (such opinion or portions of such opinion may be given by one or more counsel);
provided, however, that the State and the State's Counsel may permit variances in the form of such
opinion if such variances are not to the material detriment of the interests of the holders of the State
Bonds;
b. counterparts of this Loan Agreement and the Contract duly executed and delivered by an
authorized official of the Borrower;
c. copies of the ordinance of the governing body of the Borrower authorizing the execution and
delivery of this Loan Agreement and the Contract, certified by an Authorized Officer of the Borrower;
and
d. such other certificates, documents, opinions and information as the State, the Trustee, the Issuer,
the Bond Counsel, or the Underwriter may require.
F:\USER\COSUP\TEMP\TEMP7504.wpd
'--.,-.-.. ----.,-....----.....,. ._-,...*_.__._.,---_.,-"~-_..~'-- .
Exhibit 1
Page 20 of 26
SECTION 3.11. Maintenance of Records by State.
The State shall maintain records of all amounts held in accounts within the Special Public Works Fund
allocable to the Loan. All earnings derived from the investment of such amounts shall be retained in and
credited to such accounts and shall be available for disbursement to the Borrower pursuant to Section
3.02 hereof The State shall provide the Borrower records relating to such accounts at least twice each
year prior to the disbursement of all amounts held in such accounts.
ARTICLE IV
ASSIGNMENT
SECTION 4.01. Assignment and Transfer by State.
(a) The Borrower expressly acknowledges that, other than the right, title and interest of the State
under Section 3.06 and Section 5.04, all right, title and interest of the State in, to and under this Loan
Agreement either has been or may, at the sole discretion of the State, be assigned to the Trustee as
security for the State Bonds as provided in the Bond Indenture, and that if any Event of Default shall
occur, the Trustee, pursuant to the Bond Indenture, shall be entitled to act hereunder in the place and
stead of the State. The Borrower hereby acknowledges the requirements of the Bond Indenture
applicable to the State Bonds and consents to such assignment and appointment. The State
acknowledges that the Borrower is not a party to the Bond Indenture and has no obligation to perform
any of the State's covenants, agreements or obligations under the Bond Indenture or the State Bonds,
and that the Borrower is only required to observe and perform its covenants, agreements and obligations
under this Loan Agreement, the Contract and the Note and, if and when requested by the State, to
cooperate with the State in order to enable the State to comply with the State's covenants, agreements or
obligations under the Bond Indenture. This Loan Agreement, including, without limitation, the right to
receive payments required to be made by the Borrower hereunder and to compel or otherwise enforce
observance and performance by the Borrower of its other duties, covenants, obligations and agreements
hereunder, may be sold by the State to a third party or may be further transferred, assigned and
reassigned in whole or in part to one or more assignees or subassignees by the Trustee at any time
subsequent to its execution without the necessity of obtaining the consent of, but after giving prior
written notice to, the Borrower.
The State shall retain the right to compel or otherwise enforce observance and performance by the
Borrower of its duties, covenants, obligations and agreements under Section 3.06 and Section 5.04;
provided, however, that in no event shall the State have the right to accelerate the principal payable
pursuant to the Loan in connection with the enforcement of Section 3.06 or Section 5.04.
(b) The Borrower hereby approves and consents to any assignment, sale or transfer of this Loan
Agreement that the State deems to be necessary including any assignment, sale or transfer in connection
with any refunding of the State Bonds or the issuance of additional bonds under the Bond Indenture or
otherwise, in connection with any pooled loan program of the State.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
'_'--- -". -,~., .,-~,._,-.- ,- .~_.,._., '-~-'--r-
Exhibit I
Page 21 of 26
SECTION 4.02. Assignment by Borrower.
(a) This Loan Agreement may not be assigned by the Borrower for any reason, unless the following
conditions are satisfied:
(i) the State and the Trustee shall have approved such assignment in writing;
(ii) the assignee shall be a governmental unit within the meaning of Section I41(c) of the Code
and the assignee shall have expressly assumed in writing the full and faithful observance and
performance of the Borrower's duties, covenants, agreements and obligations under the Loan
Agreement and the Contract;
(iii) immediately after such assignment, the assignee shall not be in default in the performance or
observance of any duties, covenants, obligations or agreements of the Borrower under the Loan
Agreement or the Contract;
(iv) the State shall have received an opinion of the State's Bond Counsel to the effect that such
assignment will not adversely affect any exclusion of interest on the Loan or the State Bonds, from
gross income for purposes offederal income taxation under Section 103(a) of the Code; and
(v) the State shall receive an opinion of Counsel to the effect that such assignment will not violate
the provisions of the Bond Indenture or the Act.
(b) Except as provided in paragraph (c) of this Section 4.02, no assignment shall relieve the Borrower
from primary liability for any of its obligations under this Loan Agreement or the Contract and in the
event of such assignment, the Borrower shall continue to remain primarily liable for the performance and
observance of its obligations to be performed and observed under this Loan Agreement and the Contract.
(c) Paragraph (b) of this Section 4.02 shall not apply and the Borrower shall be relieved of its
obligation under this Loan Agreement if either:
(i) The Borrower or the assignee demonstrate to the satisfaction of the State that the assignment
will not adversely affect the rating of the State Bonds, or
(ii) A rating of the Loan is obtained which (a) addresses the assignment of the Loan Agreement
(b) is no lower than the rating of the State Bonds and ( c) satisfies the requirements of Section
2.2(a)(viii) of the Bond Indenture, or
(iii) The State consents to such assignment and certifies to the Borrower that this Loan Agreement
has not been assigned to the Trustee and provides a copy of such certification to the Trustee.
SECTION 4.03. References to Trustee, Bond Indenture, State Bonds and Issuer.
During any period of time in which this Loan Agreement has not been assigned to the Trustee, all
references in this Loan Agreement to "Trustee," "Bond Indenture," "State Bonds," "Underwriter" and
"Issuer" and the provisions of this Loan Agreement pertaining thereto shall be void and of no force or
effect except for purposes of determining the applicable requirements of the Bond Indenture or
determining any requirements of this Loan Agreement that refer to provisions of the Bond Indenture.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
'_"_ ~" ..,..,._.,~..C"____..~_._,.~..".,____
Exhibit 1
Page 22 of 26
ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01. Event of Default.
If any of the following events occurs, it is hereby defined as and declared to be and to constitute an
"Event of Default."
(a) failure by the Borrower to pay, or cause to be paid, on December I of any year any Loan
Repayment required to be paid hereunder on such due date.
(b) failure by the Borrower to make, or cause to be made, any required payments of principal,
redemption premium, if any, and interest on any bonds, notes or other obligations of the Borrower for
borrowed money (other than the Loan), after giving effect to the applicable grace period, the payments of
which are secured by the source of repayment described in Section 3.09 hereof;
(c) failure by the Borrower to observe and perform any duty, covenant, obligation or agreement on
its part to be observed or performed under this Loan Agreement, other than as referred to in paragraph
(a) of this Section which failure shall continue for a period of thirty (30) days after written notice,
specifYing such failure and requesting that it be remedied, is given to the Borrower by the State or the
Trustee, unless the State or the Trustee shall agree in writing to an extension of such time prior to its
expiration; provided, however, that if the failure stated in such notice is correctable but cannot be
corrected within the applicable period, the State or the Trustee may not unreasonably withhold their
consent to an extension of such time up to 120 days from the delivery of the written notice referred to
above if corrective action is instituted by the Borrower within the applicable period and diligently pursued
until the Event of Default is corrected;
(d) any representation made by or on behalf of the Borrower contained in this Loan Agreement, or in
any instrument furnished in compliance with or with reference to this Loan Agreement or the Loan or in
connection with the State Bonds, is false or misleading in any material respect;
(e) a petition is filed by or against the Borrower under any federal or state bankruptcy or insolvency
law or other similar law in effect on the date of this Loan Agreement or thereafter enacted, unless in the
case of any such petition filed against the Borrower such petition shall be dismissed within thirty (30)
days after such filing and such dismissal shall be final and not subject to appeal; or the Borrower shall
become insolvent or bankrupt or make an assignment for the benefit of its creditors; or a custodian
(including, without limitation, a receiver, liquidator or trustee of the Borrower or any of its property)
shall be appointed by court order or take possession of the Borrower or its property or assets if such
order remains in effect or such possession continues for more than thirty (30) days; or
(f) any event of default under Section 7 of the Contract.
F:\USER.\CD5UP\TEMP\TEMP7504.wpd
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~I
Exhibit I
Page 23 of 26
SECTION 5.02. Notice of Default.
The Borrower shall give the State and the Trustee prompt telephonic notice of the occurrence of any
Event of Default referred to in Section 5.01(e) hereof, and of the occurrence of any other event or
condition that constitutes an Event of Default at such time as any senior administrative or financial officer
of the Borrower becomes aware of the existence thereof Any telephone notice pursuant to this Section
5.02 shall be confirmed in writing as soon as practicable by the Borrower.
SECTION 5.03. Remedies on Default.
Whenever an Event of Default referred to in Section 5.0 I hereof shall have occurred and be
continuing, the State shall have the right to take, or to direct the Trustee to take, any action permitted or
required pursuant to the Bond Indenture or the Loan Agreement and to take whatever other action at law
or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become
due hereunder or to enforce the performance and observance of any duty, covenant, obligation or
agreement of the Borrower hereunder, including, without limitation, appointment ofa receiver of the
System.
In addition, ifan Event of Default referred to in Section 5.01(a) hereof shall have occurred and be
continuing and if all or a portion of the principal of and interest on the Bonds has been accelerated
pursuant to the Bond Indenture, the State shall have the right to declare, or to direct the Trustee to
declare, all Loan Repayments and all other amounts due hereunder together with the prepayment
premium, ifany, calculated pursuant to Exhibit C(8) hereof (assuming that a prepayment penalty in an
amount equal to two percent of the principal which has been accelerated shall be due in the case of an
. Event of Default that occurs and continues prior to the optional loan prepayment date shown on Exhibit
C(7) hereto or, iflater, prior to the date on which any State Bonds that funded the Loan in whole or in
part are subject to optional redemption without the requirement for payment of any redemption premium)
to be immediately due and payable, and upon notice to the Borrower the same shall become due and
payable without further notice or demand.
SECTION 5.04. Attorney's Fees and Other Expenses.
The Borrower shall, on demand, pay to the Issuer, the State or the Trustee the reasonable fees and
expenses of attorneys, whether at trial or on appeal, and other reasonable expenses (including without
limitation the reasonable allocated costs of in-house counsel and legal staff) incurred by either of the
Issuer, the State or the Trustee in the collection of Loan Repayments or any other sum due hereunder or
in the enforcement of performance or observation of any other duties, covenants, obligations or
agreements of the Borrower.
SECTION 5.05. Application of Moneys.
Any moneys collected by the State or the Trustee pursuant to Section 5.03 hereof shall be applied (a)
first, to pay any attorney's fees, Trustee's fees or other fees and expenses owed by the Borrower
pursuant to Section 5.04 hereof, (b) second, to pay interest due and payable on the Loan, ( c) third, to pay
principal due and payable on the Loan, (d) fourth, to pay any other amounts due and payable under this
Loan Agreement, and (e) fifth, to pay interest and principal on the Loan and other amounts payable
hereunder as such amounts become due and payable.
F:\U5ER\CD5UP\TEMP\TEMP7504.wpd
.. or-... .~.'. .~~.
.. -_..~_._."..-~._--_.,. _....._._-
Exhibit 1
Page 24 of 26
SECTION 5.06. No Remedy Exclusive; Waiver; Notice.
No remedy herein conferred upon or reserved to the State or the Trustee is intended to be exclusive
and every such remedy shall be cumulative and shall be in addition to every other remedy given under this
Loan Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any
right, remedy or power accruing upon any Event of Default shall impair any such right, remedy or power
or shall be construed to be a waiver thereof, but any such right, remedy or power may be exercised from
time to time and as often as may be deemed expedient. To entitle the State or the Trustee to exercise any
remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as
may be required in this Article V.
SECTION 5.07. Retention of State's Rights.
Notwithstanding any assignment or transfer of this Loan Agreement pursuant to the provisions hereof
or of the Bond Indenture, or anything else to the contrary contained herein, the State shall have the right
upon the occurrence of an Event of Default to take any action, including (without limitation) bringing an
action against the Borrower at law or in equity, as the State may, in its discretion, deem necessary to
enforce the obligations of the Borrower to the State pursuant to Section 3.03, Section 3.06 a.nd Section
5.04 hereof
SECTION 5.08. Default by the State.
In the event of any default by the State under any covenant, agreement or obligation of this Loan
Agreement or the Contract, the Borrower's remedy for such default shall be limited to injunction, special
action, action for specific performance Qr any other available equitable remedy designed to enforce the
performance or observance of any duty, covenant, obligation or agreement of the State hereunder as may
be necessary or appropriate. The State shall on demand pay to the Borrower the reasonable fees and
expenses of attorneys and other reasonable expenses in the enforcement of such performance or
observation.
F:\USER\C05UP\TEMP\TEMP7SQ4.wpd
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Exhibit 1
Page 25 of 26
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices.
All notices, certificates or other communications hereunder shall be sufficiently given and shall be
deemed given when hand delivered or mailed by registered or certified mail, postage prepaid, to the
Borrower at the address specified on Exhibit C attached hereto and made a part hereof and to the State,
the Issuer and the Trustee at the following addresses:
(a) State: Economic Development Department
775 Summer Street NE
Salem, Oregon 97310
Attention: Manager, Regional Development Division
(b) Trustee: First Interstate Bank of Oregon, N.A.
1300 SW Fifth Avenue
Portland, Oregon 97201
Attention: Corporate Trust Department
(c) Issuer: State Treasurer
350 Winter Street NE
Salem, Oregon 973 10-0840
Attention: Manager, Debt Management Division
Any of the foregoing parties may designate any further or different addresses to which subsequent
notices, certificates or other communications shall be sent, by notice in writing given to the others.
SECTION 6.02. Binding Effect.
This Loan Agreement shall inure to the benefit of and shall be binding upon the State and the
Borrower and their respective successors and assigns. In addition, the Trustee shall be considered as a
beneficial party to this Loan Agreement, with all attendant rights to enforce the duties, obligations,
covenants and agreements of the Borrower set forth herein, to the same extent as if the Trustee was a
party hereto.
SECTION 6.03. Severability.
In the event any provision of this Loan Agreement shall be held illegal, invalid or unenforceable by
any court of competent jurisdiction, such holding shall not invalidate, render unenforceable or otherwise
affect any other provision hereof
SECTION 6.04. Amendments, Supplements and Modifications.
This Loan Agreement may not be amended, supplemented or modified without the prior written
consent of the State and the Borrower. This Loan Agreement may not be amended, supplemented or
modified in a manner that is not in compliance with the Act and the Bond Indenture or so as to adversely
affect the interest of the owners of the State Bonds.
F:\USER\COSUP\TEMP\TEMP750<l_wpd
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or
Exhibit 1
Page 26 of 26
SECTION 6.05. Execution in Counterparts.
This Loan Agreement may be executed in several counterparts, each of which shall be an original and
all of which shall constitute but one and the same instrument.
SECTION 6.06. Applicable Law.
This Loan Agreement shall be governed by and construed in accordance with the laws of the State of
Oregon, including the Act.
SECTION 6.07. Consents and Approvals.
Whenever the written consent or approval of the State shall be required under the provisions of this
Loan Agreement, such consent or approval may only be given by the State unless otherwise provided by
law or by rules, regulations or resolutions of the State or unless expressly delegated to the Trustee.
SECTION 6.08. Compliance with Bond Indenture.
The Borrower covenants and agrees to observe and comply with, and to enable the State to observe
and comply with, all duties, covenants, obligations and agreements contained in the Bond Indenture.
SECTION 6.09. Further Assurances.
The Borrower shall, at the request of the State, authorize, execute, acknowledge and deliver such
further resolutions, conveyances, transfers, assurances, financing statements and other instruments as may
be necessary or desirable for better assuring, conveying, granting, assigning and confirming the rights,
security interests and agreements granted or intended to be granted by this Loan Agreement.
IN WITNESS WHEREOF, the State and the Borrower have caused this Loan Agreement to be
executed and delivered, effective as ofthe Loan Closing Date set forth on Exhibit C(1) hereto.
(SEAL)
STATE OF OREGON
BORROWER
By:
By:
~~A
(Signature)
~
Yvonne L. Addington, Manager
Regional Development Division
Title: Mayor
.,.-
Date:
Date: ~
~ 1r-7
/
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F:\U5ER\COSUP\TEMP\TEMP7504.wpd
Loan Agreement Exhibit A
PROJECT DESCRIPTION
City of Woodburn
The city's funding request will result in the needed roadway, water, and sewer infrastructure to be built
that will allow Waremart to locate at the 88-acre Woodburn site and create a minimum of 45 new jobs.
The public improvement project will more specifically construct the following infrastructure:
. The extension of 1,700 feet of 44-foot-wide roadway known as Woodland Avenue
. The installation of 1,640 feet of 12" looped water main along Woodland Avenue
. The installation of 1,690 feet of 15" sewer main, which is oversized and 23 feet deep to allow for
future abandonment of an existing sewer pump station
F:\U5ER\COSUP\TEMP\TEMP7504.wpd
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Loan Agreement Exhibit C
DESCRIPTION OF THE LOAN
1. Loan Closing Date:
November 1, 1997
2. Name and Address of Borrower:
City of Woodburn
270 Montgomery Street
Woodburn, OR 97071
3. Cost of the Project:
$905,000
4. Estimated Completion Date of Project: November 1, 1999
5. Principal Amount of Loan: $450,000
6. Interest Rate: 6% (six percent)
7. Optional Loan Prepayment Date: December I, 2005
8. Prepayment Premium:
Redemption Dates Redemption Prices
December I, 2005 through November 30,2006 102%
December 1, 2006 through November 30,2007 101%
December 1, 2007 and thereafter 100%
9. Authorized Officers of Borrower:
Nancy Kirksey, Mayor
Chris Childs, City Administrator
Ben Gillespie, Finance Director
Mary Tennant, City Recorder
G. S. Tiwari, Public Works Director
F:\USER\CDSUP\TEMP\TEMP7504.wpd
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LOAN AMORTIZATION SCHEDULE
SPECIAL PUBLIC WORKS FUND
u*****ANNUAL PAYMENT.""..
EXHIBIT D
FILE NUMBER: B97002 PRINCIPAL AMOUNT: $450,000
INTEREST RATE: 6.00% (estimate)
MUNICIPALITY: Woodburn LOAN TERM IN YEARS: 20
CLOSING DATE: 01-Nov-97
BUSINESS/PROJECT: Waremart TRUE INTEREST COST (TIC): 0.00000%
NET INTEREST COST (NIC): 6.00000%
WEIGHTED AVERAGE MATURITY: 12.56152
PAYMENT CUMULATIVE CUMULATIVE UNPAID
YEAR DATE PAYMENT INTEREST PRINCIPAL INTEREST PRINCIPAL BALANCE PERIODS
------- ---------- --------- --------- ---------- ----------- ----------------- ---------- ----------
------- ---------- --------- --------- ---------- ----------- ----------------- --------------------
1999 01-Dec-98 43,733.05 31,500.00 12,233.05 31,500.00 12,233.05 437,766.95 1.1667
2000 01-Dec.99 39,233.05 26,266.02 12,967.03 57,766.02 25,200.08 424,799.92 2.1667
2001 01-Dec-2000 39,233.05 25,487.99 t3,745.06 83,254.01 38,945.14 411,054.86 3.1667
2002 01.Dec-2001 39,233.05 24,663.29 14,569.76 107 ,9t7 .30 53,514.90 396,485.10 4.1667
2003 01-Dec-2002 39,233.05 23,789.11 15,443.94 13t,706.41 68,958.84 381,041.16 5.t667
2004 01-Dec.2003 39,233.05 22,862.47 16,370.58 154,568.88 85,329.42 364,670.58 6.1667
2005 01-Dec.2004 39,233.05 21,880.23 t7,352.82 t76,449.11 102,682.24 347,3t7.76 7.1667
2006 01.Dec-2005 39,233.05 20,839.07 18,393.99 197,288.t8 121,076.23 328,923.77 8.1667
2007 01.Dec-2006 39,233.05 19,735.43 19,497.62 217,023.61 140,573.85 309,426.15 9.1667
2008 01.Dec-2007 39,233.05 18,565.57 20,667.48 235,589. t7 161,241.33 288,758.67 10.1667
2009 01-Dec.2008 39,233.05 t7,325.52 21,907.53 252,914.69 183,148.86 266,851.14 11.1667
2010 01-Dec.2009 39,233.05 16,011.07 23,221.98 268,925.76 206,370.84 243,629.16 12.1667
2011 01-Dec-2010 39,233.05 14,6t7.75 24,615.30 283,543.51 230,986.15 2t 9,013.85 13.1667
2012 01.Dec.2011 39,233.05 13,140.83 26,092.22 296,684.34 257,078.36 192,921.64 14.1667
20t3 01-Dec-2012 39,233.05 11,575.30 27,657.75 308,259.64 284,736.12 165,263.88 15.t667
2014 Ot.Dec-2013 39,233.05 9,915.83 29,317.22 318,t75.48 3t4,053.33 135,946.67 16.1667
2015 01-Dec.20t4 39,233.05 8, t 56.80 31,076.25 326,332.28 345,129.59 t04,870.41 t7.1667
2016 01.Dec.2015 39,233.05 6,292.22 32,940.83 332,624.50 378,070.41 7t ,929.59 18.1667
20t7 01.Dec-2016 39,233.05 4,315.78 34,9t7 .28 336,940.28 412,987.69 37,012.31 19.1667
2018 01-Dec-20t7 39,233.05 2,220.74 37,012.31 339,161.01 450,000.00 0.00 20.1667
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Loan Agreement Exhibit E
Page 1 of 2
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Progress on Activities
Loan Agreement Exhibit E
Page 2 of 2
-
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.
A. ProJeet Goals (report to( every cosh request)
Ust each project activity and descr1be p'ogress on each octMty since your lost report. ALso discuss any problems or
delay$ encoo..nlerod (change Old.... schedue r_ens. elcJ. Mach oddlllonol $heel> It necessary.
Proposed Accompltshmenb
Re5Ulb Achloved
S. Construcnon Employment
In 1he $pOC9 below.1how the CU'T'Uottve total nunber of holn construction employees WOl1ced on the Infrostrucl\se
pcoject. Also fhow ClI'T'Uottve construcllon men holn wod<ed on any prlvate business projeeb served by the
Introslru::lure project.
luslno" Projocl.
1. FIrm Nome
Hours Worked
Infrastructure ProJects
HOln Worked
2. FItm Nome
Hours Worked
"
3. Arm Nome
Hexn WOl1ced
C. Pennan.nf Jobt; (for SPWF proJ4tCts only)
In the space below. show the cumulanv. runbel' of ne..... Of retained pemlOI'l8nt Jobs In private businesses selVed by
the Infraitructu'e project. Show 01 Jobs os fUl-tlme eqtAvolents based on a standard 40 hal.l' wQfk week.
"""Nome
FmlNon"lll
"""Nome
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Certiflcancn: We certify that the doto is cOfTecl end thet the
OmoLl'lt of any grant request Is not In excess of current
needs. (tWO SlGNAlUllES REQUIRED)
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Pre par. . Mall Check To:
Send Wlr. Transfers To:
Nome or Payeo:
Nome at ReCOM(1Q Bonk:
locotlon Of Stanch Nome ot bit:
Bonk Adaess:
Bonk ACCOU'lt Numb.,:
Bonk ASA ROUting ~bGr:
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Loan Agreement Exhibit F
Page 1 of 3
PROMISSORY NOTE
ECONOMIC DEVELOPMENT DEPARTMENT
STATE OF OREGON
$450,000
,19_
, Oregon
For value received, City of Woodburn (hereinafter "Borrower"), promises to pay to the Economic
Development Department of the State of Oregon, having its principal office at 775 Summer Street NE,
Salem, Oregon 97310 (hereinafter "State"), or order, the principal sum of four hundred fifty thousand
dollars ($450,000) plus interest from the date or dates specified in paragraph (b) below, on the unpaid
balance at the initial interest rate of six percent (6%) per annum. Effective as of the date of any
assignment of the Loan Agreement by the State to the Trustee pursuant to Article IV of the Loan
Agreement for the purpose of reimbursing the SPWF from the proceeds of State Bonds for the costs of
funding the Loan, the interest rate shall convert to the rate described in paragraph (f) below. Interest
shall be computed on the basis ofa 360-day year, consisting of twelve (12) thirty- (30-) day months.
Principal and Interest shall be payable as follows:
(a) The Borrower hereby promises to pay to the order of the State the principal amount specified on
Exhibit C( 5) attached to the Loan Agreement at the times and in the amounts specified on the repayment
schedule on Exhibit D to the Loan Agreement.
(b) Other than interest on any draws made by the Borrower of any portion of the principal sum of this
Promissory Note that are made pursuant to the terms of the attached Loan Agreement in advance of the
Loan Closing Date specified on Exhibit C(1) to the Loan Agreement, all interest due hereunder shall
begin to accrue as of such Loan Closing Date. Interest on any draws made by the Borrower of any
portion of the principal sum of this Promissory Note in advance of the Loan Closing Date shall begin to
accrue as of the date or dates on which such draws are made.
(c) In the event that the Borrower receives written notification from the State, the Issuer or the
Trustee that payments made pursuant to this Loan Agreement have been assigned to the Trustee under
the Bond Indenture, all payments hereunder shall be made directly to the Trustee for the account of the
State pursuant to such assignment.
(d) All payments required hereunder shall be paid by the Borrower no later than the first day of the
month preceding the month shown on Exhibit D to the Loan Agreement during which such payment is
due.
F:\USER\COSUP\TEMP\TEMP7504.wpd
~_.
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Loan Agreement Exhibit F
Page 2 of 3
( e) Each payment made by the Borrower hereunder shall be applied first to interest then due and
payable on the Loan, then to the principal of the Loan.
(f) Effective as of the date of any assignment of the Loan Agreement by the State to the Trustee
pursuant to Article IV of the Loan Agreement for the purpose of reimbursing the SPWF from the
proceeds of State Bonds for the costs of funding the Loan, the interest rate on the Loan shall convert to a
rate, as calculated by the State, equal to the lowest rate (in one basis point increments) that will be
sufficient to ensure that the annual amounts paid by the Borrower pursuant to this Promissory Note shall
be no less than the Borrower's pro-rata portion of the maximum annual debt service on the Bonds.
If any default occurs in the payment of an installment, the entire remainder of the unpaid balance,
including principal, interest and other charges, if any, shall, at the option of the State, become
immediately due and payable. If this Note is placed in the hands of an attorney' for collection, Borrower
agrees to pay the reasonable collections costs incurred by the holder hereof, including such reasonable
attorney fees for trial and appellate services as may be fixed by the court.
This note is not payable prior to its maturity except as provided for in Sections 3.07 and 3.08 of the
Loan Agreement.
Presentment, demand, protest, and notice of dishonor, protest and nonpayment are waived by
Borrower. This Note shall be binding upon the Borrower and its successors and assigns. If the Borrower
or any assignee hereof becomes insolvent, commits an act of bankruptcy, commences or becomes subject
to any proceeding under the federal Bankruptcy Act, as amended, or any other insolvency or debtor's
relieflaw, then the entire indebtedness evidenced by this Note shall, at the option of the State, become
immediately due and payable.
Failure to exercise any option available to the State under the terms of this Note and the Loan
Agreement shall not constitute a waiver of the right to exercise the option in the event of any continuing
or subsequent default, and no waiver of any subsequent breach ofthe same or of any other provision of
this Note.
Payments of principal, interest and other fees or charges dues under this Note are payable at the
offices of the State, 775 Summer Street NE, Salem, Oregon 97310, or such other place as the State may
designate in writing. Any notice to the State shall be given by certified mail, return receipt requested, at
the address stated above. Any notice to Borrower provided for in this Note shall be given by mailing
such notice by certified mail, return receipt requested, addressed to Borrower at the address specified on
Exhibit C(2) attached to the Loan Agreement, or such other address as Borrower may designate in
writing to the State.
F:\USER\CDSUP\TEMP\TEMP7504.wpd
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Loan Agreement Exhibit F
Page 3 of 3
The terms, provisions, covenants and conditions contained in this Note shall apply to, inure to the
benefit of and bind the parties hereto and their respective heirs, successors and assigns.
In connection with the Loan evidenced by this Note, the Borrower has executed a Loan Agreement of
equal date hereto and the indebtedness evidenced by this Note is secured under that Loan Agreement.
Any capitalized terms not defined in the Note shall have the meanings assigned to such terms in the Loan
Agreement.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed this --'i day of
C,,4 ,19.J..
BORROWER
By: vr\CWWi +- \<-~.~,
\ \
Title: Mayor
NOTICE TO BORROWER
Do NOT SIGN THlS NOTE BEFORE YOU READ IT. THIs NOTE IS NOT SUBJECT TO FULL OR PARTIAL
PREPAYMENT BEFORE THE DAm PROVIDED FOR REPAYMENT IN THlS NOm AND IN THE LOAN AGREEMENT
AND A PENALTY FOR ANY SUCH PREPAYMENT MAYBE CHARGED AND COLLECTED.
F:\USER\C05UP\TEMP\TEMP7504.wpd
Exhibit 2
SPECIAL CONDITIONS OF AWARD
City of Woodburn
1. Prior to the disbursement of construction funds, the city will submit documentation by the appropriate
state regulatory agency that the proposed water and sewer extensions are approved for construction.
2. Prior to the execution of the contract, the city will submit documentation that a competitive bid
process will be followed.
3. The principal of and interest on the Loan shall be payable from (a) the Borrower's State Revenue
Sharing Fund and (b) the revenues of the Borrower's motel and hotel tax.
4. The Borrower shall not incur any obligations payable from or secured by a.lien on and pledge of the
State Revenue Sharing Fund or the revenues ofthe motel and hotel tax that is superior to or on a
parity with the Loan.
5. The loan shall be payable from the general fund of the Borrower and shall be a full faith and credit
obligation of the Borrower which is payable from the taxes which the Borrower may levy within the
limitations of sections 11 and 11 b, Article XI of the Oregon Constitution.
6. The interest rate on the bonded portions of the loan shall be a pass through of the actual cost of the
revenue bond series.
7. Bids received on May 29, 1997, were about $190,000 below the engineering estimate. Since the loan
portion of the Special Public Works Fund award is disbursed before any grant funds, it is anticipated
that (at the end of the project) the grant amount will be reduced. Upon receipt of the final cash
request, the remaining grant funds will be recaptured for use by other communities.
F:\USER\CDSUP\TEMP\TEMP7504,wpd
Exhibit 3
ENVIRONMENTAL AND NATURAL RESOURCE AGENCIES
The following list is provided in compliance with ORS 279.318. The federal, state, and local agencies
listed have enacted ordinances or regulations relating to environmental pollution or the preservation of
natural resources that may affect the performance of construction contracts.
FEDERAL AGENCIES
Agriculture, Department of
Forest Service
Soil Conservation Service
Army, Department of the
Corps of Engineers
Coast Guard
Energy, Department of
Environmental Protection Agency
Health & Human Services, Department of
Heritage Conservation and Recreation Service
Interior, Department of
Bureau of Indian Affairs
Bureau of Land Management
Fish and Wildlife Service
Office of Surface Mining, Reclamation and Enforcement
Bureau of Reclamation
Labor, Department of
Occupational Safety & Health Administration
Mine Safety & Health Administration
Transportation, Department of
Federal Highway Administration
STATE AGENCIES
Agriculture, Department of
Energy, Department of
Environmental Quality, Department of
Fish and Wildlife, Department of
Forestry, Department of
Geology and Mineral Industries, Department of
Human Resources, Department of
Land Conservation and Development Commission
State Lands, Division of
State Soil & Water Conservation Commission
Transportation, Department of
Water Resources Department
LOCAL AGENCIES
City Councils
County Courts
County Commissioners, Boards of
Planning Commissions
Special Districts: Ports, Water, Sewer, Roads
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